Strong Opinions @marksbirch

Random thoughts from a NYC entrepreneur and investor about start-ups, technology and the people that make it all happen. Also find time for good tunes and good food.
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"As a startup CEO, I slept like a baby. I woke up every 2 hours and cried."

- Ben Horowitz

Sleeping like a baby these days…

I read with amusement the other day a point Keith Rabois made regarding entrepreneurs and blogging:

After what must have been well over a few hundred responses, it seemed that Keith was not really all that off the mark. There are maybe a handful that could be considered possible exceptions, but for the most part those successful CEO’s and entrepreneurs (by Keith’s definition) are just not blogging. They may throw up a post once in a blue moon, but on a regular basis? Not so much. Let’s face it, who has time for that?

I am not sure this is anything unexpected though. Honestly, how many people blog on a regular basis (which for the sake of argument, once a week)? Other than people whose job is in fact blogging, either for their own enterprise or in the employ of an online content provider, there is not a whole lot. There are a few well known examples in the tech world like Fred Wilson and Brad Feld, otherwise there is scant few. Who’s got the time to spare if it’s not your job?

Or maybe our idea of time and commitment is misconstrued. I do not necessarily believe it is always comes down to time that stops folks from blogging. You could say that about any non-work activity. Who has time for exercise or who has time to watch Stanford college football games or who has time to spend with one’s family or who has time to take vacations…you get the point. Everything is a balance based on priorities. If it is important, then you make time for it.

Rather than time, the issue may be about exposure. Blogging is a very public and permanent record of the author. Your blog advertises you, your thoughts, and your opinions to the world, all unfiltered and available in a click to be shared across all the social networks. For one’s personal brand, that is a powerful medium. From the perspective of a company however, that is not a highly valued. Rather, the corporate minions see it as a massive and unacceptable risk.

CEO’s and entrepreneurs are not their own boss. That whole “be your own boss” thing is overstated. They might have more latitude, but there are investors to answer to, employees to consider, customers to please, media and press to cultivate, partners to work with. A CEO is not a utility player or a free agent, but the face of the company. That is why those quotes in press releases sound so dull and lifeless. That is why there are handlers and training provided to CEO’s at speaking events to make sure they do not go off script. That is why companies invest heavily in people and processes so that they can control the message and the flow of communications.

Sure, most CEO’s and entrepreneurs are too busy to blog. Often startup founders are heads down for months at a time delivering on product and close sales and building a company. There are plenty however that do have or could make the time. Some have even said as much to me. But they realize either explicitly or implicitly that their “blogging” may not be a good idea. At most, they may get a company blog or a regular column in some media outlet, but the content will be heavily scrubbed or even ghost written by the PR team. At that point, the words lose poignancy and authenticity. Their blogs and social media accounts are sanitized to remove any whiff of originality and personality.

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And that is a shame. I see immense value in blogging as an executive or entrepreneur. For me, this is my “down time” in that it affords me the opportunity to think expansively on ideas or to think deeply on a topic. That means I cut out an hour of the day for a post, but it is well worth it. In the same way, it is important for folks to have dedicated “think time” and the exercise of writing lends itself naturally to that process. It unlocks ideas, it exposes insights, and it brings clarity, which are the type of mental exercises that become diminished when in the fever pitch of running a company.

Will we see more authentic voices emerge from the CEO and successful entrepreneur world? I believe so, as we are starting to see with more executives taking to Twitter and more forums available provide thoughts and opinions without the baggage of maintaining a blog. But it is not so much about the “infrastructure” or the medium of delivery, but the fact that social media is not the exception anymore, but the reality. Kids are growing up in an age of ubiquitous social networks, always on Internet, faster and more powerful smartphones, and with this access is a different set of mores about sharing and openness. Maybe it is not “blogs” in the future, but in order to rise above the increase noise and overflow of information, authentic, engaging, and genuine voices are going to stand out. That is where the best and smartest companies will be heading in the future, with leaders that shift away from risk management and move forward into engagement.

ADDENDUM:  I realized that I forgot one of the key points I meant to discuss and the whole reason for this post!  One of the implications in the Twitter debate was that CEO’s and entrepreneurs that blog often are taking time away from running their companies.  Thus “blogging” somehow correlates to harming one’s business.  This is important to understand for startups because many investors harbor negative perceptions of entrepreneurs that are heavy users of social media.  The message is that it is okay for investors to blog and tweet and such, but not for entrepreneurs.  I find that position ludicrous and rather hypocritical.  As Andy commented below, would the same hold for speaking at events, talking to the press, writing thought leadership pieces and articles, or other types of communications?  Of course not!

As a company gets big, the information that informs decision-making gets massive. Depending upon the prism through which you view the business, your perspective will vary. If two people are in charge, this variance will cause conflict and delay. Every employee in a company depends on the CEO to make fast, high quality decisions. Often any decision, even the wrong decision, is better than no decision. These decisions are pulse of the organization. Sharing command almost guarantees that the CEO position will perform poorly in this dimension.

Shared Command" by Ben Horowitz

Sharing ultimate decision making responsibilities is always an impending leadership disaster.

McKesson’s Chairman and CEO John Hammergren has set a new record in corporate America: Largest pension around. The drug distribution company disclosed in a regulatory filing Friday that Hammergren was entitled to a $159 million lump-sum payment for his pension, had he voluntarily left the company on March 31.

McKesson CEO entitled to record $159M pension" via SFGate

It should be noted that he has not received this payment, this is simply a filing as required by public companies to disclose various compensation scenarios for departing executives.  However, he received in excess of $50 million per year in compensation since joining McKesson as CEO in 1999.

Meanwhile, pensions are being outright eliminated for most Americans or converted to 401k plans with little or no guarantees.  Many American workers have gone without a pay raise for over a decade.  Meanwhile average CEO compensation for public US companies is $9.7 million and the ratio of their salaries to rank and file employees is 204:1.

Folks, this is not sustainable.  The culture of greed and self-interest is not compatible with democracy or a balanced, well-functioning civil society.  The country’s founding was one built upon the ideal of opportunity for all, not opportunism for few.

Half.com founder and CEO Josh Kopelman once told me that the thing he hated most about being CEO was when two of his smartest people would disagree and he would have to come down on one side: “These decisions were usually 51/49% and I was left having to console the ‘loser’.” He’s right. Arbitrating these disagreements is one of the hardest and most emotionally draining parts of the job, but many CEOs just avoid it and nothing breeds a horrible culture like a CEO who puts offs decisions or, worse yet, makes too many compromises.

The CEO’s Weekly Checklist // Scott Weiss (via datainsightsideas)

They should really change CEO to CDO for Chief Decision Officer.  Your most important role when leading a company is to make decisions.  If you fail at that, your company is heading for ruin.

(via datainsightsideas)

Senior managers are attending a bigger share of meetings than before…attending 70% of private investor meetings over the past year, up from 64% a year earlier. On average, CEOs and finance chiefs devoted 14 days and 17 days, respectively, to these meetings.

Investors Demand CEO Face Time" via The Wall Street Journal

Investor relations is a full-time job for CEO’s if your company takes on investors, regardless of whether it is a startup or a Fortune 500 corporation.  On another note, researchers have found that attending meetings makes people stupider.

As a startup CEO, you wear many, many hats.

The deck that Mark Suster created ”Entrepreneurshit: The Truth About Building Startups" has some solid thoughts.  While the focus of the deck is on fund raising, this was the one image that stood out for something other than fund raising.

When you are the CEO of a startup, you take on every role to some degree.  You are not just the hotshot hacker or the sales rockstar or the product strategist.  You are involved in every single task, no matter big or small and no matter whether it is your core competency or something totally foreign.  Even when the startup grows and you take on more to handle things like accounting and sales and HR, you are still responsible for knowing what is going on.

A funny thing that I have noticed about superstars is how rare it is to repeat success.  There are many obvious examples from the ranks of corporate CEO’s, when many highly lauded executives have moved on to another opportunity only to meet abject failure.  Robert Nardelli from GE to Home Depot, John Sculley from Pepsi to Apple, Carol Bartz from Autodesk to Yahoo are just a few of the more high profile examples.  They all had varying length tenures, but they all suffered from the same problem.  They had extensive skills but those skills did not translate in the new environment.

This skills vs. environment issue is something I have seen play out again and again across many types of roles and levels of responsibility.  In a HR tech startup I co-founded, one project involved analyzing the executive training program for a Fortune 100 firm.  The program trained highly prized recruits for two years to groom them for senior roles within one of the business units.  However, many of the recruits had quit once the program concluded.  It was discovered that people who stayed and thrived had one thing the other recruits did not have; a strong background in research and development.  It did not matter that the recruits were Ivy League MBA’s with impeccable credentials or that the company was a highly respected firm that won numerous best employer awards.  If the person did not fit well into the organization, the relationship never worked.

Studies bear out much of the dichotomy between a job candidate’s skills and long-term success.  Leadership IQ looked into why newly hired employees fail and concluded that 89% failed for reasons other than not having the requisite skills for the job.  Many of the factors cited such as motivation, temperament, communications and such all point to the fact that while skills are important, they may have less of a factor in job performance than we have come to expect.

One might be excused for coming to the conclusion that hiring is at best a crap shoot.  Many of the tools that we have become familiar with seem to do a poor job at actually assessing talent.  However, there are ways to reduce the risk of hiring failures by being aware of common traps one makes during the hiring process when evaluating candidates.  The following three points cover the most egregious yet correctable mistakes when hiring for highly critical roles:

  • Job Title Divergence – One mistake is thinking that a particular job title encapsulates one set of immutable and easily transferable skills.  The more responsibility and ownership one has over the direction and execution of corporate goals, the greater variability in the skills required to be successful.  This is because the role is less about a set of tasks to be completed (thus more easily defined in a job description), and more about leadership skills, decision making and higher level analytical thinking.  These “softer skills” tend to be missed in most tests and interview scripts that focus on technical and functional job skills.  However, a larger part of one’s success in a job owes more to skills that are not as easy to capture on a test.
  • Past Performance Bias – Just like investments, past success is a poor barometer for future performance.  While it can demonstrate one’s bias towards action, what made a person successful in past roles may not transfer well into the other job (because of Job Title Divergence).  Looking at the historical record can color the candidate vetting and decision making process because at the risk of offending a highly “pedigreed” candidate, there is a tendency to soft ball the assessment process.  This came to light in my HR startup where a client had a series of VP of manufacturing hires fail in quick succession even though the candidates had excellent track records.  We performed a deep analysis of the skills required for the role, then found a candidate that was completely outside the industry that was more of a fit based on the newer profile.  The lesson was to focus more on the skills (covering functional, management, and leadership domains) needed for the job during the hiring process rather than on past performance.
  • Culture Fit Dissonance – While the first two mistakes are serious, discounting or completely ignoring the issue of cultural fit within the broader organization has lethal results.  Mark Hurd was prasied as a great hire when HP first brought him onboard as CEO, yet several years later after his departure HP was in disarray and demoralized.  The “HP way” was about innovation and product focus, but the Hurd way was about sales and money management.  Culture fit is not something that can be immediately gleaned from a resume or at a distance.  Even the cursory interview or two does not work.  Mark Zuckerburg spent 50 hours in total over the course of many meetings and many months with Sheryl Sandburg before hiring her.  It was obvious she was that proverbial “A player” and had the requisite skills, but Mark had to be sure she would fit in at Facebook.

So, what is the most important lessons to take away from this?  Do not underestimate the damage caused by the misalignment of culture in your hiring!  It is a slow killer and something that is hard to recognize when you are under the impression that everyone around you is an “A player”.  That is the heavy selection bias that colors our viewpoint when it comes to evaluating talent.  We dismiss the poor hires as bad apples, disgruntled employees, or simply liars.  On the other hand, we overestimate employees that we deem great hires as having superior skills.  The reality is that being highly skilled is only part of the equation.  Talent can only thrive when skills, culture, and goals meet.

This is not to say that there are not extraordinary people that seem to have that “A player” aura.  Steve Jobs managed to resurrect his early career to become one of the most legendary business leaders of our generation.  Richard Branson would be another excellent example of being massively successful in a number of endeavors.  However, these are entrepreneurs that defy categorization.  They are not people that are simply plugged into someone else’s culture; they create culture.  They would never be people that you hire, because they are outsized personalities and overwhelming forces of charisma, energy, and conviction.

Do not get caught in the game of hiring A players and chasing talent.  Have the strength of conviction that your culture and hiring process are sound.  If you have a compelling vision, a promising product, and a good network, you can find talented people to join your team.  The people that show genuine excitement about your idea, give up sleep and weekends and fat paychecks, and show initiative are your true A players.  Those are the people that are going to stick it out with you when things are rough.

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The only way to learn how to be a CEO is to be a CEO. Sure, we might try to teach some skills, but I know from experience that learning to be a CEO through classroom training would be like learning to be an NFL quarterback through classroom training.

Why Has Andreessen Horowitz Raised $2.7B in 3 Years?" by Ben Horowitz

Resonated with my sports themed post from this morning on belief.  The moral of the story is that the only way you learn is by doing.

This week was a prolific one on the Strong Opinions.  We recommended that cats stop doing startups and stick with licking themselves, showed how to cyberstalk people, demonstrated egregious social media snobbery, cut down the digital content middlemen to size, exposed Christmas to be the 800lb gorilla of holidays, and showed salespeople to not be totally useless.

Since I know you did all your Christmas shopping ahead of time, there are no excuses for not catching up on these articles of mass awesomeness.  Enjoy and happy reading!